Proha Plc STOCK EXCHANGE BULLETIN May 23,2002 at 9.15 am
INTERIM REPORT OF PROHA PLC FOR THE PERIOD JANUARY 1 - MARCH 31,
2002
- Proha Group’s net sales were EUR 19.8 million (EUR 20.8
million)
- Operating loss totaled EUR -0.33 million (EUR -0.98 million)
- Result for the first quarter 2002 was EUR -0.26 million
(EUR -1.11 million)
- Proha management keeps to its previous result estimates for
2002
FIRST QUARTER IN BRIEF
Proha maintained its net sales volume by increasing the service
sales of the Project Management business area and the net sales
of the Financial Management business area. Based on public
information, it can be estimated that Artemis increased its
market share. The first quarter 2002 continued to be challenging
especially for Artemis’ software license sales. France, Italy
and Great Britain in particular were affected by the economic
slowdown. The market situation was offset by a total of 22,000
Artemis’ licenses sold to new users, increasing the number of
licensed Artemis users to 420,000 worldwide.
Net sales for the Financial Management business area grew by
40%, compared to the corresponding period in 2001. Accountor Oy
made a positive result, but due to ProCountor.Com, which is at a
development stage, the result of the Financial Management
business area turned slightly negative.
The Group’s net sales for the first quarter 2002 were EUR 19.8
million (EUR 20.8 million in 2001). Operating loss was EUR -0.3
million, against operating profit of EUR -0,98 million for the
same period in 2001. The result was slightly weaker than
previously estimated. Earnings before financial expenses, taxes,
and depreciation (EBITDA) was EUR -0.98 million (EUR 0.002
million in 2001). Net result was EUR -0.26 million (EUR -1.1
million in 2001).
The international marketing and sales of Artemis
PortfolioDirector, a strategic-level management solution, was
started. In the area of project and resource management, new
browser-based releases of Artemis Views product family were
introduced. Product development investments were EUR 2.4
million, representing 12% of net sales for the first quarter
2002.
PROSPECTS FOR THE NEAR FUTURE AND RESULT
Artemis’ growth targets are focused on strategic management and
resource management solutions, whose markets have greater growth
potential than the traditional project management markets.
The volume of offers for PortfolioDirector, a new portfolio
management solution, is more robust, and pilot projects have
been launched. Sales of PortfolioDirector are expected to be
significant towards the year-end.
Demand for resource management solutions is growing, the
development work of new solutions is in the final stage, and the
first extensive installations to the customers’ production
environment have been made. In the area of resource management,
Proha expects substantial growth during the remainder of 2002.
Although software license sales are expected to increase during
the current quarter, their share of net sales has not yet
reached the worldwide target level. According to the target, one
time license revenue, recurring license revenue, and service
revenue would each account for one third of net sales.
Artemis subgroup plans to reduce costs by approximately 5%,
compared to the level at the end of 2001. This involves the
enhancement and acceleration of product development. Artemis
also plans to harmonize its worldwide marketing strategy and
working procedures in order to provide better service for its
global customers.
In the Financial Management business area, the Finance
Department concept finalized during the first quarter is
expected to attract new customers from large and medium-sized
enterprises already in the current quarter. The number of users
of ProCountor.Com service, designed for small and medium-sized
companies, is also anticipated to increase.
Proha management keeps to its previous estimates for 2002,
according to which the Group will achieve a positive net result
without net sales growth. If market conditions are favorable,
the sales target is a 20% organic growth. Net sales and result
are expected to improve during the second half of 2002.
STRATEGY AND IMPLEMENTATION
Proha’s long-term goal was to become a global software company.
After the initial public offering in 1999, Proha expanded its
operations in Finland. During the first half of 2000, all
significant project management software companies in Finland
were consolidated into Proha. The US-based Artemis, also
operating in Great Britain and Japan, was acquired during the
second half of 2000. Artemis’ distributors and associated
companies operating in the main markets were consolidated into
the Group, which laid a solid foundation for a leading project
and resource collaboration company. At the end of 2001, Artemis
companies and Opus360 were consolidated into a publicly held
Artemis International Solutions Corporation.
During 2002, Proha focuses on the development of global business
processes. Business operations are developed and activities are
enhanced by utilizing the existing global sales and service
network. The Group structure is being streamlined. Proha follows
closely the consolidation development of the industry.
Proha aims at profitability and growth. The Company strives for
increasing its market share in all circumstances. This objective
can be attained through strategic partnership with corporate
customers, which Proha’s current product and service portfolio,
as well as, product development support. Proha’s solutions cover
project and financial management needs on all organizational
levels. Artemis will introduce and implement new software
products in co-operation with its customers.
In the Financial Management business area, Accountor Oy
completed the development work of the new Finance Department
concept for large and medium-sized enterprises. The service
concept comprising financial management development, IT systems
and outsourcing services is based on long-term partnership with
the customer. The new concept has been well-received by the
markets, and it is expected to attract several significant
clients during the second quarter 2002.
The number of ProCountor.Com users grew substantially during the
first quarter 2002. At the moment, the service has over 1000
users.
NET SALES AND RESULT
Proha is a global software company focusing on maximizing its
customers’ business performance by providing management
solutions. The Proha Group’s net sales for the period 2002 were
EUR 19.8 million, against EUR 20.8 million for the corresponding
period in 2001. Earnings before financial expenses, taxes, and
depreciation (EBITDA) was EUR -0.98 million (EUR 0.002 million
in 2001).
Operating loss was EUR -0.3 million, a decrease of 66% compared
to the same period in 2001 (EUR -0,98 million). Result before
appropriations and taxes was EUR -0.4 million (-2% of net
sales), compared to EUR -1.1 million in 2001. Earnings per share
for the three month period was EUR -0.005 (EUR -0.02 in 2001).
Net sales and EBIT by business area, EUR 1000
Business Area Net sales EBIT %
Artemis companies
(Project Management) 18,860.1 -559.5 -3.0
Accountor companies
(Financial Management) 1,636.3 -68.3 -4.2
Intellisoft companies
(Internet Technologies) 560.1 -107.2 -19.1
Other areas 279.9 -235.6 -84.2
Eliminations -1,523.9 640.7
Total 19,812.5 -329.9 -1.7
FINANCING AND INVESTMENTS
At the end of the first quarter 2002, the balance sheet total
was EUR 50.98 million, compared to EUR 57.1 million in 2001.
Cash items and short term investments stood at EUR 5.1 million,
against EUR 5.5 million for the same period in 2001. The Quick
Ratio was 0.9, compared to 1.1 for the corresponding period in
2001.
The product development expenses of strategic products totaled
EUR 2.4 million which was expensed in full.
Interest-bearing liabilities were EUR 4.5 million (EUR 7.7
million in 2001), equivalent to 9.2% of the Group’s capital and
reserves total and provisions and creditors total at the end of
the period (13.9% in 2001).
PRODUCT DEVELOPMENT
For the first quarter 2002, the development expenses of
strategic products were EUR 2.4 million, 12% of net sales. The
figure was expensed in full.
The second release of PortfolioDirector, a strategic investment
portfolio management solution, was announced. The testing of the
new project and resource management tool was completed, and the
first extensive installations to the production environment of
pilot customers were made. New collaboration functionalities for
ViewPoint solutions were introduced.
PERSONNEL
At the end of the first quarter 2002, the Proha Group employed
623 people. In 2001, the corresponding number of personnel was
684. Staff expenses were EUR 12.2 million (EUR 12.7 million in
2001), 62% of net sales (61% in 2001). 485 (557) people worked
in the area of Project Management, 106 (86) in Financial
Management, and 32 (41) in Internet Technologies. The number of
employees in Finland was 229 (227), while 394 (457) worked
abroad.
BUSINESS ARRANGEMENTS AND CHANGES IN ASSOCIATED COMPANIES
In January 2002, Proha acquired the remaining 43.2% share in the
German Artemis International GmbH. In the directed issue, the
shareholders of the German Artemis were offered a total of
312,920 new Proha Plc shares, with a book parity of EUR
81,359.20. The shares were transferred to Artemis International
Solutions Corporation as the final payment of the share exchange
agreement signed between Proha Plc and Opus360 Corporation on
April 11, 2001.
The Proha Board of Directors used the option to acquire the
remaining 40% of the Norwegian Safran Software Solutions AS
(Safran) shares as per purchase agreement of April 6, 2000. In
the directed issue, the shareholders of Safran were offered a
total of 500,000 new Proha Plc shares, with a book parity of EUR
130,000.00.
OTHER GROUP EVENTS
Proha sold its investment in Widene Oy
In January 2002, Proha Plc sold its share in Widene Oy, an IT
growth company, in which Proha made a capital investment in
November 2000. The price corresponded to the original investment
and it was not disclosed, since it was such a small part of
Proha’s business.
Intellisoft outsourced server maintenance
In January 2002, Intellisoft agreed to outsource hosting and
network services to Xenetic Oy. Intellisoft focuses on its core
know-how, the offering of service entities.
Artemis’ new President and CEO and Board of Directors
The Board of Directors of Artemis International Solutions
Corporation (AISC) named Michael J. Rusert as President and CEO
of Artemis International Solutions Corporation as of January 25,
2002. At the same time, Mr. Rusert was elected as a Board
member. The former President and CEO Steven Yager continues as
member of the AISC Board of Directors. He was also elected as
Vice Chairman of the Board.
James Cannavino, Artemis Board member since January 1999, was
elected as new Chairman of the AISC Board of Directors. The
other members of the AISC Board of Directors are Klaus Cawén,
Alec Gores, Ari Horowitz, Pekka Pere, Bryan Plug, and Olof
Ödman.
Artemis Industrial Solutions, which operates in the construction
and industry sector, was reorganized as a separate unit of
Artemis Finland Oy. Artemis Industrial Solutions’ objective is
to meet the needs of the customers within the industry. Its main
market areas are Finland and other Nordic countries.
CHANGES IN THE SHARE CAPITAL
On March 31, 2002, the Company share capital was EUR
13,485,490.20 and the number of Company shares was 51,867,270.
The figures include an increase in the share capital (a total of
EUR 211,359.20 and 812,920 shares) on February 1, 2002,
consisting of directed share issues to the shareholders of the
German Artemis International GmbH and the Norwegian Safran
Software Solutions AS.
AUTHORIZATION TO ISSUE SHARES
The Annual General Meeting of Proha Pcl held on April 15, 2002
authorized the Board of Directors to increase the Company share
capital in one or more issues by issuing new shares, stock
options, option warrants and/or convertible bonds. Pursuant to
this authorization, the aggregate maximum number of new shares
to be issued or offered for subscription pursuant to the stock
options, option warrants and/or convertible bonds shall not
exceed 10,373,454 shares with an account equivalent value of EUR
0.26 each, and the share capital of the Company may be increased
by no more than EUR 2,697,098.04, which represents 20% of the
currently registered share capital and of the votes that can be
cast in the General Meeting of Shareholders. The Board of
Directors is authorized to decide the subscription price and the
other terms and conditions of the issue of shares, stock
options, option warrants and/or convertible bonds. The
authorization is valid until April 14, 2003.
INCENTIVE SYSTEM FOR PERSONNEL
In its meeting on January 31, 2002, Proha Plc Board of Directors
approved the subscriptions of the option issue that is part of
Proha’s incentive system. In the issue, a total of 1,458,000
Proha Plc stock options were subscribed, entitling to a
subscription of 1,458,000 shares. The stock options were granted
without compensation to the personnel of Proha Plc and some of
Proha Group’s subsidiaries and the members of the Board of
Directors.
The Proha Board of Directors confirmed the subscription price
for the shares subscribed on the basis of the stock options as
EUR 0.43 per share.
In its meeting on December 17, 2001, the Extraordinary General
Meeting decided to issue a maximum of 1,500,000 stock options.
The terms and conditions of the option issue were published as a
stock exchange bulletin on November 29, 2001.
TRADING ON THE HELSINKI STOCK EXCHANGE
The number of registered shareholders of Proha Plc totaled 3,958
at the end of the period in 2001. During the period, the share
price was EUR 0.31 at its lowest and EUR 0.71 at its highest.
Market capitalization was approximately EUR 35.3 million at the
end of the period.
DECISIONS OF THE GENERAL MEETING
The Annual General Meeting of Proha Plc held on April 15, 2002
confirmed the 2001 Financial Statements and discharged the
members of the Board of Directors and the CEO from liability for
2001.
The General Meeting approved the Board of Directors’ proposal
according to which the result for the financial year 2001 is
entered in capital and reserves and no dividend is paid.
Michael J. Rusert, President and CEO of Artemis International
Solutions Corporation, was elected as a new member of the Proha
Board of Directors. Olof Ödman (Chairman), Pekka Pere, James
Cannavino, Klaus Cawén, Alec Gores, Ari Horowitz, and Steven
Yager continue as members of the Board of Directors.
KPMG Wideri Oy Ab was elected as the Company’s auditor, with
Reino Tikkanen, APA, as the auditor in charge.
The Annual General Meeting of Proha Plc authorized the Board of
Directors to increase the Company share capital in one or more
issues by issuing new shares, stock options, option warrants
and/or convertible bonds. Pursuant to this authorization, the
aggregate maximum number of new shares to be issued or offered
for subscription pursuant to the stock options, option warrants
and/or convertible bonds shall not exceed 10,373,454 shares with
an account equivalent value of EUR 0.26 each, and the share
capital of the Company may be increased by no more than EUR
2,697,098.04, which represents 20% of the currently registered
share capital and of the votes that can be cast in the General
Meeting of Shareholders. The Board of Directors is authorized to
decide the subscription price and the other terms and conditions
of the issue of shares, stock options, option warrants and/or
convertible bonds. The Annual General Meeting also canceled the
authorization given by the Extraordinary General Meeting on
December 17, 2001 to increase the share capital on the unused
proportions.
The Board of Directors was also authorized to decide who will be
invited to subscribe for the new shares, stock options, options
warrants and/or convertible bonds. The authorization includes
the Board’s right to deviate from the shareholders’ pre-emptive
subscription rights, provided that such deviation is justified
by an important financial reason, such as strengthening the
Company’s capital structure, financing corporate acquisitions
and/or restructurings and/or providing incentives for the
personnel of the Company and its subsidiaries. The authorization
includes the Board’s right to decide on the calculation basis of
the subscription price, as well as the subscription price, and
other conditions, such as, that in the new subscription the
shares can be subscribed for against capital contribution
property or otherwise under special conditions. The
authorization is valid until April 14, 2003.
ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED FINANCIAL STATEMENTS
In the interim report, the consolidation complies with the
accounting principles of the financial statements on December
31, 2001.
The financial statements of foreign subsidiaries have been
consolidated into the Group in accordance with the Finnish
Accounting Act.
Proha acquired the remaining 40% share of Safran with a directed
issue. Safran is now a wholly-owned subsidiary of Proha Plc. The
nominal value of the share issue is entered as acquisition cost.
On January 31, 2002, Proha acquired the remaining 43.2% share of
the German Artemis’ share capital with a directed issue. The
nominal value of the share issue is entered as acquisition cost.
Amortization of consolidation reserve
The consolidation reserve of EUR 6.15 million originating from
the Opus360 Corporation transaction is amortized during 11
months starting from August 1, 2001. For the period January 1 -
March 31, 2002, the amortization of consolidation reserve was
EUR 1.6 million.
Depreciation of consolidated goodwill
The consolidated goodwill for Artemis companies is depreciated
in 10 years and for other companies in 3 years. For the period
January 1 - March 31, 2002, the depreciation of consolidated
goodwill was EUR 0.6 million.
Minority interest of Opus360 Corporation
For the minority shareholders of Opus, a minority interest of
20% is presented separately from the capital and reserves at the
time of the purchase and from the result for the period, a total
of EUR 0.3 million.
Fixed assets assessment
Straight-line depreciation is used as a depreciation method.
According to plan, the depreciation period is 3-10 years.
Research and development expenses
Research and development expenses were EUR 2.4 million, which
were expensed in full.
Company shares
The Group has no Proha Plc shares.
EVENTS FOLLOWING THE FIRST QUARTER
Significant opening for Proha’s Safran product family in
shipbuilding industry
Kvaerner Masa-Yards Inc. agreed to use the time and resource
management solution developed by Proha Group’s Norwegian
subsidiary Safran in the cruise ship building. This is Safran’s
first delivery outside the offshore industry.
PROSPECTS FOR THE NEAR FUTURE
Proha management keeps to its previous estimates for 2002,
according to which the Group will achieve a positive net result
without net sales growth. If market conditions are favorable,
the sales target is a 20% organic growth. Net sales and result
are expected to improve during the second half of 2002.
The Board of Directors of Proha Plc
For more information please contact:
PROHA PLC
President and CEO Pekka Pere, tel. +358 (0)20 4362 000
pekka.pere@proha.com
www.proha.com
DISTRIBUTION:
Helsinki Stock Exchange
Major Media
PRESS CONFERENCE
Proha Plc will hold a press conference for the media and
financial analysts at 1.00 p.m. on May 23, 2002 at the World
Trade Center, Cabinet 2, second floor, address: Aleksanterinkatu
17, Helsinki.
Welcome
PROHA GROUP CONSOLIDATED PROFIT AND LOSS ACCOUNT AND BALANCE
SHEET JANUARY 1 - MARCH 31, 2002
The figures are unaudited.
PROHA GROUP CONSOLIDATED PROFIT AND LOSS ACCOUNT
PROFIT AND LOSS ACCOUNT 1/02 - 3/02 1/01 - 3/01 1/01-12/01
(EUR 1000) (EUR 1000) (EUR 1000)
Net sales 19 812 20 779 82 845
Variation in stock 0 24 -16
Share of results of
associated companies 62 73 -900
Other operating income 210 28 547
Raw materials and services -3 256 -2 324 -13 548
Staff expenses -12 194 -12 660 -49 188
Depreciation and reduction in value
Depreciation according
to plan -455 -520 -2 399
Reduction in value of goods
held as non-current assets -6 - -167
Depreciation of goodwill -636 -465 -1 965
Change in consolidation
reserve 1 749 - 2 828
Depreciation and reduction
in value total 651 -986 -1 704
Other operating charges -5 615 -5 918 -24 135
Operating profit/loss -330 -984 -6 098
Financial income and
expenses -73 -97 -1 147
Profit/loss before
extraordinary items -403 -1 080 -7 246
Extraordinary items 0 - 0
Profit/loss before
appropriations and taxes -403 -1 080 -7 246
Appropriations 0 0 0
Income taxes -220 -119 -620
Change in deferred
tax liabilities -3 1 -2 999
Profit/loss before
minority interest -626 -1 199 -10 865
Minority interest
of the result 364 93 781
Other direct taxes 0 - -1
Profit/loss for
the period -262 -1 106 -10 085
CONSOLIDATED BALANCE SHEET 31.3.2002 31.03.2001 31.12.2001
ASSETS
Non-current assets
Intangible assets 16 755 17 666 17 330
Tangible assets 3 326 2 910 3 069
Investments 2 469 2 808 2 657
Non-current assets total 22 550 23 384 23 056
Current assets
Stocks 0 153 0
Non-current debtors 0 313 0
Current debtors 23 374 27 739 24 254
Short-term investments 95 323 93
Cash in hand and at bank 4 968 5 181 6 954
Current assets total 28 436 33 709 31 301
ASSETS TOTAL 50 986 57 093 54 357
LIABILITIES
Capital and reserves
Share capital 13 485 13 784 13 274
Share premium account 3 872 3 266 3 816
Retained earnings -7 563 3 833 2 522
Translation difference 3 101 83 2 887
Profit/loss for the period -262 -1 106 -10 085
Capital loan 187 187 187
Capital and reserves
total 12 820 20 047 12 601
Minority reserve 594 314 1 125
Provisions 833 445 824
Appropriations 0 0 1
Consolidation reserve 1 859 0 3 544
Creditors
Non-current creditors 1 635 4 498 1 901
Current creditors 33 246 31 789 34 362
Creditors total 34 880 36 287 36 263
LIABILITIES TOTAL 50 986 57 093 54 357
KEY RATIOS OF THE PROHA GROUP
1/02-3/02 1/01-3/01 1/01-12/01
Net sales (EUR 1000) 19 812 20 779 82 845
EBITDA* -981 2 -4 394
% of net sales -4.6 0.0 -5.3
Operating profit/loss (EUR 1000) -330 -984 -6 098
% of net sales -1.7 -4.7 -7.4
EBIT** -330 -984 -6 098
% of net sales -1.7 -4.7 -7.4
Profit/loss before appropriations
and taxes -403 -1 080 -7 246
% of net sales -2.0 -5.2 -8.7
Profit/loss for the period -262 -1 106 -10 085
% of net sales -1.3 -5.3 -12.2
1) Weighted number of
shares (split adjusted) 51 587 264 51 035 158 51 049 618
1) Earnings per share, EUR -0.005 -0.02 -0.20
2) Number of shares 51 867 270 51 054 350 51 054 350
at the end of the period
2) Equity per share, EUR 0.24 0.39 0.24
3) Number of shares diluted by
stock options 51 867 270 51 172 992 51 049 618
3) Earnings per share, EUR -0.005 -0.02 -0.20
Personnel at the end of
the period 623 684 638
Average personnel 626 675 690
*Earnings before financial expenses, taxes and depreciation
**Earnings before financial expenses and taxes
Net sales by geographical area
United States 35.5%
Finland 23.1%
Rest of Europe 30.8%
Asia 10.6%
Net sales by product type
One time license 19.3%
Recurring license 23.1%
Services 56.3%
Other 1.3%
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